Fitch affirms Kenya

Fitch Ratings said it affirmed Kenya's long-term foreign-currency issuer default rating at B+ and local-currency rating at BB- with stable outlooks. The B short-term rating and BB- country ceiling were also affirmed.

The agency said a stringent dose of monetary policy has helped restore macroeconomic stability during 2012. Large twin deficits, combined with strong credit growth, rapid inflation and a sharp depreciation of the exchange rate, raised serious doubts about macroeconomic stability during 2011, Fitch said, and volatility was exacerbated by the slow response of monetary policy.

Inflation reached a peak of 19% in November 2011 but had declined to 10% in June, and economic prospects remain favorable as the impact of the drought on agriculture and energy generation abates, the agency said.

Political risk continues to weigh on Kenya's investment environment given the scale of post-election violence in early 2008 and continuing tensions, Fitch noted.

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